ICE weekly outlook: Canola futures linked to NAFTA

(Dave Bedard photo)

CNS Canada — ICE Futures Canada canola contracts zigged and zagged around the $520 per tonne mark during the week ended Wednesday — but one analyst says the market could really take a turn if and when the future of the North American Free Trade Agreement is clarified.

“The Canadian dollar is already moving to the upside because of hopes a better arrangement in NAFTA could come on auto parts,” said Keith Ferley of RBC Dominion Securities in Winnipeg.

The Canadian dollar had been weakening as of late, which resulted in recent export business, he said. The loonie dropped to 76.21 U.S. cents at one point Sunday, but was well above the 77 U.S. cent mark as of Wednesday afternoon, raising ideas more monetary pressure could be on the way.

Many farmers have been sitting on their hands in anticipation of higher prices but the situation is far from certain, Ferley said.

“You’ve got farmers saying ‘I’m not getting excited about these prices, give me higher prices,’ but it’s the old canola standoff and we’re going nowhere.”

There are also questions about whether the U.S. will adjust its blending rate for the amount of biodiesel that must be used annually, he said.

On one side are oil companies pushing for the rate to be lowered, while corn and soybean growers would like to see the amount raised.

“What’s Washington going to do?” he asked. “Will they appease refiners or appease farmers? That will have a spillover effect.”

Going forward, Ferley said, the U.S. Department of Agriculture’s planting intentions report on March 29 will play a key role in determining near-term direction for canola.

“Will bean acres be above expectations?” he said. “The thinking is it will likely come in above consensus and this will drive new crop beans down.”

— Dave Sims writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.


Stories from our other publications